Pay-as-you-go (PAYG) financing for products like solar home systems have been revolutionary to removing financial barriers for consumers, and unlocking new markets for product distributors. To date, PAYG has enabled consumers to purchase more than 119 million solar lighting units worldwide between 2010 and 2017, while granting distributors access to a larger base of customers that would otherwise be unable to afford the upfront cost of these life-changing products. PAYG has also enabled consumers access to increasingly more expensive and sophisticated products once a history of successful payment is established. An individual without established credit can start at the bottom of the energy access ladder, with the purchase of a solar lamp or small accessory, and then with the establishment of creditworthiness advance to more sophisticated products such as large solar home systems, TVs, and other life-changing products.
Pay-as-you-go financing typically requires embedded metering and monitoring technology, which allows distributors to sell products to consumers on credit, and then turn off the device if the repayments are not being made according to the loan terms. As markets and consumer needs shift and become more sophisticated, product distributors in emerging markets are finding that consumers are demanding a variety of non-metered products including clean cookstoves, smartphones, bicycles, and motorbikes, among others. Although these non-metered products are in high-demand, they do not have the metering and monitoring technology necessary for pay-as-you-go financing. Therefore, they introduce risk for non-repayment for distributors. But technologies are keeping pace with demand and unique solutions are being developed to enable the distribution of non-metered products and reduce the risk for distributors keen on selling these products to last-mile customers.
Clean Cookstoves
According to the Clean Cooking Alliance, three billion people around the world cook their meals using open fires or inefficient stoves. Four million die prematurely each year from illnesses associated with household air pollution. Clean cookstoves eliminate exposure to the toxic household air pollution that burning kerosene, wood, charcoal, and coal creates. And the time spent collecting fuel, such as wood, can be diverted to income generation, education, or other productive activities.
Smartphones
Smartphone ownership is on the rise around the world. However, India’s and Sub-Saharan Africa’s adoption of smartphones has been modest due to their high upfront cost. Only one-in-four Indians, for instance, report using the Internet or owning a smartphone. Regionally, Sub-Saharan Africa is one of the least wired parts of the globe. Pay-as-you-go financing can unlock the potential these phones have to provide customers access to the Internet, news, social networking, information about health and medicine, or to apply for a job, among other uses.
Bicycles and Motorbikes
Bicycles and motorbikes provide life-changing economic opportunities, however — again — the upfront cost is a barrier to ownership. Bicycles or “boda boda” motorbikes, especially when bundled in conjunction with a smartphone and the use of a ride-hailing app or e-ridesharing services, are unleashing financial opportunities for entire households across Africa and other emerging market regions.
Remetering Unlocked Products
As more and more consumers demand clean cookstoves, smartphones, motorbikes, and other life-changing products, distributors are searching for opportunities to provide these non-metered products while minimizing risk. Fortunately, for consumers that have already paid off a metered product, like a solar home system, the unlocked product can be used to confidently offer non-metered products to customers by remetering the unlocked device. Remetering will reactivate the pay-as-you-go technology inside of the metered product so it can be used to manage repayment of the non-metered product.
For example, if a distributor has a client who has completed payment on their metered solar home system and now wants to purchase a non-electronic clean cookstove, the distributor can remeter their solar home system to use as collateral for repayment of their clean cookstove. Offering non-metered products expands a distributor’s portfolio of products, helping them reach more clients and retain existing ones. In addition to reducing the loan management risks associated with non-metered products, remetering allows distributors to upsell and cross-sell additional products to clients, increasing their ability to provide a wide-variety of life-changing products.
With Angaza’s remetering technology, distributors are able to set new pay-as-you-go pricing terms for a remetered product, capture initial client interest by creating prospective accounts for your clients interested in a non-metered product, plus customize user permissions to control which of your employees can offer remetering, among other features. Learn more about Hub and Activator features like Remetering.
